SBI, Macquarie pump $150m into Ashoka Buildcon unit
Two private equity funds managed jointly by State Bank of India and Macquarie Bank of Australia have agreed to invest $150 million in the road construction division of Indian roads and bridges operator Ashoka Buildcon.
Macquarie SBI Infrastructure Fund and SBI Macquarie Infrastructure Trust will funnel the investment into the Ashoka Concessions subsidiary.
Ashoka Buildcon had been in talks with private equity and strategic investors to raise the sum to finance seven large-scale road projects since last October, having hired Ernst & Young India to advise on the raise. The projects will cost a total of $1.6 billion, and represent less than a third of the 25 road projects - 20 of which are operational - that the company runs on a ‘build, operate, transfer' (BOT) basis.
The company also engineers, designs and procures the raw materials for projects and collects tolls on roads and bridges. Ashoka Buildcon began operations in 1976, but prior to 1997, it was solely engaged in the engineering and construction of residential, commercial, industrial and institutional buildings.
Government estimates put India's infrastructure investment requirement at $1 trillion for the five years beginning April 2012. Losses from poor infrastructure are believed to amount to one to 2 percentage points of GDP.
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